MILWAUKEE – When UW-Milwaukee Chancellor Carlos Santiago was provost at State University of New York at Albany, he was part of the team that created a $1 billion nanotechnology research center.

Santiago, who celebrated his first anniversary as chancellor last week, hopes to duplicate that public-private partnership at the state’s second largest university.

In a recent interview in his wood-paneled office on the Milwaukee campus, the native of Puerto Rico said he wants keep UW-Milwaukee accessible while pushing a “culture shift” that promotes research and the kind of technology transfer that will lead to spinoff companies.

Santiago, who earned his doctorate in economics at Cornell University, said he would lobby Gov. Jim Doyle to keep $2.5 million in the budget for the proposed Biomedical Technology Alliance. Santiago said it would be a “shame” for Doyle to veto the seed money for cooperative research efforts between UW-Milwaukee, the Medical College of Wisconsin, Marquette University, the Milwaukee School of Engineering and the UW-Parkside.

WisBusiness Editor Brian Clark interviewed Santiago on July 19.

Brian Clark – Is the Biomedical Technology Alliance necessary?

Carlos Santiago – Yes. It is the consortium that the city needs. No one educational institution is big enough to carry this load. But as a consortium we have a greater opportunity. We have a good engineering school, good medical school, etc.

I view that $2.5 million as nominal seed money for that consortium. It would be for matching grants. I think it would be a shame if it were vetoed. It would not bode well for Milwaukee to build a research infrastructure. If you are not able to leverage $2.5 million, that is not a good sign.

Santiago – Actually, the figure is now up to $1.6 billion, with $200 million more coming from the private sector and an additional $400 million from the state.

Clark - Did you have anything to do with that?

Santiago – The real mover and shaker in all this was is the fellow who is now the dean, Alain Kalyeros. At the time this got off the ground, he was the head of an umbrella research institute.

He was a faculty member in physics and the department was producing very good PhD’s. IBM was hiring every PhD student they had. IBM also was building a chip fabricating plant south of Albany. I toured the facility and talked to the CEO of the technology division of IBM. The cost for the clean room was $100,000 per square foot. Obviously, IBM couldn’t do any training there or research and development. It was exclusively for production.

So, IBM turned to Albany and said we know you produce good people in material science, you’ve got this great faculty member who has a good team of people, you’ve got an institute – so why don’t we give you $100 million, $90 million of which is equipment.

We then got the state to match it dollar for dollar and had our first $200 million investment in this project. We then created out of that a graduate school focused on nano-scale science. The faculty member who headed up the center became the dean and reported to me.

Dr. Kalyeros is quite an entrepreneurial guy, a very good judge of talent and had a lot of support in state government, particularly from the governor of New York. After that initial investment, Sematech – the consortium of microchip manufacturers – decided to move part of their operation from Austin, Texas to Albany and they invested $200 million and the state matched that dollar for dollar.

Then Tokyo Electron, a lithography company which had never invested in an R&D facility outside of Japan, decided to invest $150 million and again, the state matched that. That got us to $1 billion. And now there is another $600 million.

This is transforming the region along the Hudson River corridor. It is becoming an R&D center for the microchip industry. It is a very good public-private partnership.

Clark – Didn’t you just hire someone to get this sort of thing off the ground?

Santiago – Yes. He is Dr. Abbas Ourmazd, our new vice chancellor for research and graduate school dean. He is a physicist in material science. He knows all the companies in that industry very well. He said no one company is big enough to pull off a kind of facility like they are setting up in Albany. So it makes a lot of sense to look at university and state as partners.

As long as you have a state that is willing to match an industry dollar with a state dollar, they can pull off quite an enterprise.

Clark – Tell me a little more about Dr. Ourmazd?

Santiago – He started July 15 and he came to us from Germany. He is an Oxford-trained Phd and a very well known physicist. He held an endowed chair at Brandenburg University and prior to that was the division director of materials at Bell Laboratories. He was recruited to Germany to head up their national laboratories, had an endowed chair and was the CEO of a microchip company. He has the kind of experience we were looking for.

He is someone who knows the academy and knows cutting-edge research, but also has been in the private sector and understands what it is to run a high tech company.

Clark – How did you get him to come to UW-Milwaukee?

Santiago – In part, he was looking to come back to the states. I asked him why UW-Milwaukee, and he said he could go to a well-established research institution and make sure he didn’t make any mistakes and ruin a good thing. Or he could come here and create something. He saw a chance to make a difference in Milwaukee. We were delighted to recruit him.

Clark – Are you hoping to replicate here what happened in Albany?

Santiago – That question has certainly come up. Some have said, "will you do nano-tech in Milwaukee like you did in Albany?" My answer is that you can’t dictate what area will be the one that Milwaukee needs to focus on. I think here in this region we have strengths in health and health science at the Medical College and UW-Milwaukee.

Some had said, “why don’t you do a ‘nano-bio’?" -- a medical engineering and medical technology that includes those components. And I think it’s fine if it develops in that manner. But if there is one thing I’ve learned, it’s that you can’t dictate which way the research will go. You have to let it flourish.

What we are trying to replicate from the Albany experience is the kind of private-public partnership that is working there. As to what area, that will develop here in Milwaukee in particular ways based on the strengths of our institutions.

The notion that you mix private dollars with public dollars means that private sector is going to want something out of the deal. They clearly will want research to be directed in some way is what we will try to reproduce.

Clark – Do you foresee partnering with GE Healthcare?

Santiago - GE Healthcare is a strength in the region. When we had the Strategic Research Development Program competition, we had $1 million of very scarce campus resources. Rather than spread it across the million- and-one needs, I said “Let’s have a competition and let’s have a few very strong proposals in areas of strength on the campus. The proposals must have linkages across different institutions, including the private sector.”

The proposal that came out on top was to create the Wisconsin Institute for Biomedical and Health Technologies. If you look at that proposal, it has our School of Nursing, School of Health Science, Physics Department, School of Business, Medical College of Wisconsin, GE Healthcare, Aurora and the Cerner Corp.

It brings together 65 scientists from those institutions. We will put the $1 million into the creation of that center. At the end of the day, we hope to leverage another $15 million from the partners. GE Healthcare is an important part of that. We think there are a lot of advantages for us to work with them and we hope they think there are advantages for them to work with us.

The days of having the state pick up the cost of research infrastructure are pretty much gone. For the first time, tuition and fees that students are paying now surpass general purpose revenue on this campus. Our operating expenses are less than 25 percent supported by state taxpayers. That is the trend nationally. If the university is going to make a contribution, it has to do it a different way and that’s why we are looking to do it with the private sector.

Tech transfer can be a very, very important piece of that.

Clark – You’ve said it will take a cultural shift at UW-Milwaukee to make that happen. What did you mean?

Santiago – UW-Milwaukee is designated as one of only two public campuses in the state that are designated as doctoral research campuses. We do research. We have a significant amount of research across all of our colleges.

Given our size and the quality of our faculty here, however, we appear very limited in the amount of funded research. We have to convert our culture of research into a culture of funded research on the campus. That is where the sciences and engineering play such an important role. Those units have the greatest opportunities to bring in additional dollars.

And we need it. If we are to fulfill mission as a research institution, we need to have greater funded research. That will create an indirect cost return stream. Out of every research dollar we get, some fraction comes in as indirect cost and we use that to reinvest in the research enterprise.

We need to make the whole greater so we can make strategic investments in support of the campus – hiring faculty, getting post docs and fellowships for students. Ultimately, that is what we want.

On the economic development front, the research may produce spinoffs and jobs. But you really want to enhance the academic profile with better faculty and students.

Clark – Is it mostly a matter of getting faculty to seek out grants?

Santiago – In part, if you look at our operation, we have to reduce the obstacles. We have to create the kind of incentive structure so it is worthwhile for the faculty to do that.

Some deans have come to me and said, “If a faculty member who comes to me with a $1 million grant (for a lab), I’ll have no place to put them.”

Space is a real constraint on this campus. We have to be able to support a growing research infrastructure. We have to have incentives instead of making it an onerous process in doing a grant application, but rather a process in which the university supports the faculty member.

We need to have matching funds and spaces that are appropriate. We need to have state-of-the-art facilities so that if people get grants we’ll have wet labs for them.

Our engineering school is in a 14-floor building. I’ve toured the building and it is not conducive to doing 21st century research. It was probably built in the 60’s and you’ve got little hallways and doors that keep the scientists from interacting with each.

Twenty-first century science is done in buildings that are often no more than four floors, have big open spaces and lots of interaction. They also have the ability to fit and refit the offices in different ways as needs change. Our engineering building is totally unsuitable for the kind of research that this university needs to be doing in support of this town.

Clark – What can you do about the space limitations?

Santiago – I think obviously Columbia St. Mary’s is a possibility for us. Here you have a hospital that will be up for sale at some point. It will take time. We also have space at the Cousins-Cudahy Center. And we may need to need to rent and lease space in support of our research operations. We are looking at space at the Medical Campus where Children’s Hospital and the Medical College are located. They have new buildings coming up and we can make arrangements with them to get our researchers there, that will help as well.

You can always find space, but the question is can you afford the space and is it suitable for kind of research you need to do.

Clark – NovaScan is often lauded as a spinoff that came out of this campus. Are there others in the pipeline?

Santiago – It is early to tell. But we certainly hope so. There is one promising enterprise that is in the negotiation stage. I can’t tell you too much, but a faculty member in chemistry, Jim Cook, has been working with the pharmaceutical industry in chemical compounds. We hope to sign an agreement with a major pharmaceutical company. If you successful with something like this, it can bring significant revenue to the campus and the scientist.

Clark – Would you like to have someone like UW-Madison’s Hector DeLuca emerge here?

Santiago – Of course. Any campus would like to have someone like him. (DeLuca has scores of patents to his name, has been a gold mine for bringing in research dollars and has started at least a half-dozen companies in Madison.)

Finding the right talent is the key. That million dollar investment in the Wisconsin Institute for Biomedical and Health Technologies will go to people. We want to hire a center director and a research team that can really support areas of strength on the campus in medical technology and medical engineering.

We would love to have a DeLuca. But I think we already have a lot of talent here. With the right incentives and infrastructure, you will find people like him. We must create a climate to grow people, too. Madison has done that very well.

Clark – Madison is sometimes called the 600-pound gorilla in terms of research because it gets something like $750 million in grants each year. Is there competition between UW-Madison and UW-Milwaukee?

Santiago – I don’t think so. Those Madison numbers include medical and clinical research at the UW-Madison Medical School. We don’t have a medical school, which is why, in part, we are collaborating more with the Medical College. We have some of the basic sciences they don’t have, but they have a lot of the clinical research that we don’t have. There is a natural point for the two institutions to work together.

We are generating $30 million or so in terms of contract research and $68 million in total research dollars coming in. That pales in comparison to Madison.

If Milwaukee’s research infrastructure were stronger, we could be closer to $100 million. And the Medical College is generating more than $100 million right now and they are looking to get to $200 million. If we work more with the Medical College, we will have a partner that has closer ties to Madison. I think that strengthens Madison and Milwaukee.

Some people have talked about an "I-Q Corridor" that runs from Chicago through Milwaukee and Madison to Minneapolis. Milwaukee is the weak link in terms of research infrastructure. I think if Milwaukee were stronger, there would be greater cross-pollination as well as with Madison and Chicago. I want us to get to the point where we do more collabortive research with faculty at Madison and in Chicago.

Clark – How would you assess your first year?

Santiago – It’s gone well. There are a lot of challenges, but I think I can make a difference here in Milwaukee. It is a nice city. It has wonderful cultural attributes, good restaurants, nice airport and transportation system – despite the construction downtown. It is a diverse city of neighborhoods and very livable.

One thing that surprises me is how the city beats up on itself. It doesn’t highlight its wonderful attributes like its museum, its arts and great sports for a city this size. I've lived in Detroit, I’ve lived in Ithica and Albany, New York and Milwaukee is a much more livable place. People are friendly and supportive. But it can be a bit insular.

Clark – Could it use a little New York aggression?

Santiago – I would hesitate to add New York pressure here. Days start earlier here, but people value family time more I think and that’s good. New York is more rough around the edges in the working culture. But I don’t know if they are any more productive there. Maybe a little more neurotic on the East Coast.

My concern for this part of the state, which is the economic hub of Wisconsin and has to do well for the state to thrive, is that the economy is changing because of global factors.

Universities are more and more involved in that process of change and people talk about the knowledge economy. Wisconsin can have a bright future if we make the commitment to diversifying the local economy. Manufacturers can benefit from high tech development like new materials.

At the same time, other states are making investments in high tech development that I don’t see here. Some of the projections of where Wisconsin’s income level will be in 20 years relative to the surrounding states and other is a cause for concern.

One projection I saw said that by 2024, Wisconsin’s income would be 83 percent of national average. If look at state’s today that are at 83 percent, we are talking about a series of states that I don’t think Wisconsin wants to consider its peers.

Clark – Are you worried that there is a them-and-us attitude in Wiscosin with Madison and Milwaukee on one side and much of the rest of the state on the other?

Santiago – Yes. You see those kinds of divisions. Fortunately, people around Milwaukee are talking about the region. I think it is important that this kind of thinking is growing.

The truth is the suburbs' fate relies on what is happening in Milwaukee and vice versa. It is good that political leadership in the city and surrounding counties are talking to each other.

Clark – Are there any obstacles to your vision?

Santiago – There are many.

Clark – What are the biggest ones?

Santiago – The economy is in part, but it is more how we sustain a growing research enterprise. How do we get the kind of seed funding we can leverage to get other dollars to support it?

Once you start you growing the high tech side of the operation and it becomes a hub, that will have a dynamic of its own. The more scientists you have in a particular space, the greater the propensity of new ideas. We’ve got to create the critical mass and Milwaukee still doesn’t have that. We need more people and better infrastructure.

Scientists are very expensive, though not necessarily in terms of salaries. If I hire an assistant professor in biochemistry, it can cost me $500,000 to set him or her up in a lab. If it is a senior person, it an be $1 million or $1.5 million.

Given the state’s finances and the local economy, it is tough to come up with those dollars. Fortunately, many legislators understand where the future lies for this university because of where we are located. We want Milwaukee to pull the state forward rather than hold it back.

Clark – Any other thoughts?

Santiago – We’ve mapped out where we want to go and what roll the university can play in the region and with tech transfer. The next year will be spent on how we realign our processes and structures to support that vision.

We want to remain an institution of access and opportunity and grow research in support of economic development in the state. We’ve been very focused on that the first year.

The second year will be more difficult and will be the key. We might have to do things differently, focusing our limited resources in particular areas. It will be challenging. We hope state and private sector will support us.